January 25, 2012

In China, Human Costs Are Built Into an iPad

By CHARLES DUHIGG and DAVID BARBOZA

The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that
twisted metal pipes as if they were discarded straws.
When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from
the area where employees polished thousands of iPad cases a day.
Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances,
one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a
mat of red and black had replaced his mouth and nose.
Are you Lai Xiaodongs father? a caller asked when the phone rang at Mr. Lais childhood home. Six months
earlier, the 22-year-old had moved to Chengdu, in southwest China, to become one of the millions of human
cogs powering the largest, fastest and most sophisticated manufacturing system on earth. That system has made
it possible for Apple and hundreds of other companies to build devices almost as quickly as they can be
dreamed up.
Hes in trouble, the caller told Mr. Lais father. Get to the hospital as soon as possible.
In the last decade, Apple has become one of the mightiest, richest and most successful companies in the world,
in part by mastering global manufacturing. Apple and its high-technology peers as well as dozens of other
American industries have achieved a pace of innovation nearly unmatched in modern history.
However, the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to
employees inside those plants, worker advocates and documents published by companies themselves. Problems
are as varied as onerous work environments and serious sometimes deadly safety problems.
Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say
they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apples
products, and the companys suppliers have improperly disposed of hazardous waste and falsified records,
according to company reports and advocacy groups that, within China, are often considered reliable,
independent monitors.
More troubling, the groups say, is some suppliers disregard for workers health. Two years ago, 137 workers at
an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to
clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu,
killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the
Chengdu plant, according to a Chinese group that published that warning.
Apple is not the only electronics company doing business within a troubling supply system. Bleak working
conditions have been documented at factories manufacturing products for Dell, Hewlett-Packard, I.B.M.,
Lenovo, Motorola, Nokia, Sony, Toshiba and others.
Current and former Apple executives, moreover, say the company has made significant strides in improving
factories in recent years. Apple has a supplier code of conduct that details standards on labor issues, safety
protections and other topics. The company has mounted a vigorous auditing campaign, and when abuses are
discovered, Apple says, corrections are demanded.
Apple never cared about anything other than increasing product quality and decreasing production cost, said
Li Mingqi, who until April worked in management at Foxconn Technology, one of Apples most important
manufacturing partners. Mr. Li, who is suing Foxconn over his dismissal, helped manage the Chengdu factory
where the explosion occurred.
Workers welfare has nothing to do with their interests, he said.
If half of iPhones were malfunctioning, do you think Apple would let it go on for four years? the executive
asked.
In 2010, Steven P. Jobs discussed the companys relationships with suppliers at an industry conference.
I actually think Apple does one of the best jobs of any companies in our industry, and maybe in any industry,
of understanding the working conditions in our supply chain, said Mr. Jobs, who was Apples chief executive
at the time and who died last October.
I mean, you go to this place, and, its a factory, but, my gosh, I mean, theyve got restaurants and movie
theaters and hospitals and swimming pools, and I mean, for a factory, its a pretty nice factory.
Others, including workers inside such plants, acknowledge the cafeterias and medical facilities, but insist
conditions are punishing.
Were trying really hard to make things better, said one former Apple executive. But most people would still
be really disturbed if they saw where their iPhone comes from.

A Demanding Client
Every month, officials at companies from around the world trek to Cupertino or invite Apple executives to visit
their foreign factories, all in pursuit of a goal: becoming a supplier.
When news arrives that Apple is interested in a particular product or service, small celebrations often erupt.
Whiskey is drunk. Karaoke is sung.
Then, Apples requests start.
Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size
of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will
pay for a part. Most suppliers are allowed only the slimmest of profits.
So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their
employees to work faster and longer, according to people at those companies.
The only way you make money working for Apple is figuring out how to do things more efficiently or
cheaper, said an executive at one company that helped bring the iPad to market. And then theyll come back
the next year, and force a 10 percent price cut.
Ultimately, say former Apple executives, there are few real outside pressures for change. Apple is one of the
most admired brands. In a national survey conducted by The New York Times in November, 56 percent of
respondents said they couldnt think of anything negative about Apple. Fourteen percent said the worst thing
about the company was that its products were too expensive. Just 2 percent mentioned overseas labor practices.
People like Ms. White of Harvard say that until consumers demand better conditions in overseas factories as
they did for companies like Nike and Gap, which today have overhauled conditions among suppliers or
regulators act, there is little impetus for radical change. Some Apple insiders agree.
You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every
year, and make it better and faster and cheaper, which requires factories that seem harsh by American
standards, said a current Apple executive.
And right now, customers care more about a new iPhone than working conditions in China.
Gu Huini contributed research
http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-
china.html?pagewanted=all&_r=0&pagewanted=print